A major policy shift on income tax cuts has revived debate on scaling back the use of negative gearing on investment properties.

With the government’s revised cuts expected to clear parliament, housing tax breaks are shaping up to be the next key battleground for reform.

Negative gearing, which allows investors to claim deductions on losses, and the capital gains tax discount, which halves the amount of tax paid by Australians who sell assets that have been owned for 12 months or more, have re-entered the spotlight.

While the government’s amended tax cuts will provide some relief for Australians, Greens leader Adam Bandt says future tax reform will have to act on these breaks to more thoroughly address cost of living issues and housing shortages.

“We’ve got is this tax system that rewards people who’ve got five properties (and helps them) to go and buy their sixth, seventh and eighth,” he said.

“(The capital gains tax discount) says if you’re rich enough to make your money out of buying and selling properties, you get to pay half the tax compared to someone who’s a wage earner.”

The government, however, says its position on negative gearing and the capital gains tax discount remains unchanged.

But Shadow Treasurer Angus Taylor said the prime minister’s word could not be trusted after his government broke its election promise to leave the original stage three tax cuts untouched.

“These tax increases are all on the table,” he told the chamber.

Mike Zorbas, the Chief Executive of Property Australia, reacted to talk of changes to negative gear last week in his weekly newsletter.

“Unusual last week to speak about changes to negative gearing. It is after all no longer the policy of the government,” he said. “And yet here we were saying this.”

He outlined all the impacts on the housing market before saying “the federal government knows housing supply is the key to more housing choice and sustained downward pressure on the cost to buy and to rent across Australia”.

“Deloitte modelling of proposed 2019 negative gearing changes showed a reduction of housing construction by 4.1 percent,” he said.

“Taken today, these changes would boot the government’s admirably ambitious 1.2 million home target from 2029 firmly into the next decade.

“That and altering negative gearing is nowhere near the first thing you would change about our ancient and mystical tax system even if it didn’t reduce new home construction.”

– with AAP